Class Actions in Canada

Friday, November 12, 2004

November 12, 2004

10TH ANNIVERSARY CELEBRATIONMark your calendars now for the 10th Anniversary celebration of BC's Class Proceedings Act. CLE is putting on a seminar on Friday, February 25th in Vancouver. Our office is chairing the conference, and the faculty includes such notables as Mr. Justice Winkler, Chief Justice Brenner, Deputy Attorney General Allan Seckel, and Ontario and Quebec class action gurus Kirk Baert and Gilles Gareau, as well as all the leading lights of the BC class action bar. It should be a great day. I attach a copy of the agenda. I invite lawyers from across the country to attend, as the conference is not restricted to BC issues. I can't think of a better excuse to get your partners to offset the cost of a weekend ski vacation to Whistler!Please contact Catherine Branch at CatherineB@cle.bc.ca to sign up and obtain further details regarding cost etc.If you would like to head in the other geographic direction for your class action education, there is a seminar in Quebec on January 24 and 25. A brochure is attached.

PAY DAY LOAN APPEALS CONSIDEREDIn MacKinnon v. National Money Mart, 2004 BCCA 473, the BC Court of Appeal held that the trial judge had prematurely concluded that the arbitration clauses in the contract were inoperative prior to a full consideration of the class certification issues. The court held that the consideration of whether the clauses were inoperative should await a full consideration as to whether arbitration was preferable to class litigation. If arbitration was preferable, the clauses would not be rendered inoperative. If the class proceeding was preferable, the arbitration clauses would be rendered inoperative.In MacKinnon v. National Money Mart, 2004 BCCA 472, the BC Court of Appeal held that it was not necessary to have a representative plaintiff for each defendant in BC in order to meet the Rule 19(24) pleadings requirement. The court held that the court could properly consider that the action was a proposed class proceeding even in advance of certification, notwithstanding the definition of a class proceeding as a "certified class proceeding" in s.1 of the BC Act. The court also distinguished the contrary Ontario case law on the basis that BC legislature acknowledged that it was possible for non-class members to serve as representative plaintiff's in s.2(4) of the BC Act (for which there is no Ontario equivalent). The court did say that where one plaintiff is seeking to certify an industry wide class action, the court would have to be rigorous in the application of the certification standards.The writer is counsel for 4 defendants in these actions.

PENSION CASE NOT CERTIFIED YETIn Mortson v. OMERB, 2004 OJ 4338 the court refused to certify this class proceeding on the basis of the record before it, after one of the more vigorous defences I have seen in a pension case (where class action treatment has become somewhat routine). The defendant successfully negated some of the proposed issues on the basis that they disclosed no cause of action, and drove necessity of amendments to the definition of "value" in the claim to ensure that it was able to be the subject of common determination. The court accepted that litigation was preferable to the administrative remedy, but was entranced by the "test case" alternative pitch. The court sought some further evidence that a class action would be preferable to individual litigation given that the issues were quite narrow. The court made some interesting comments narrowing the scope of the Pearson v. Inco comment that class members should have the capacity to pay adverse costs awards.

CHANGE PROPOSED TO BC'S LEGISLATIONB.C. is patching the problem created by the fact that the stay of the limitation period only kicked in on certification. A new section is proposed as follows:Limitation period for a cause of action not included ina class proceeding38.1 (1) If a person has a cause of action, a limitation period applicable to that cause of action is suspended for the period referred to in subsection (2) in the event that(a) an application is made for an order certifying a proceeding as a class proceeding,(b) when the proceeding referred to in paragraph (a) is commenced, it is reasonable to assume that, if the proceeding were to be certified,(i) the cause of action would be asserted in the proceeding, and(ii) the person would be included as a member of the class on whose behalf the cause of action would be asserted, and(c) the court makes an order that(i) the application referred to in subsection (1) (a) be dismissed,(ii) the cause of action must not be asserted in the proceeding, or(iii) the person is not a member of the class for which the proceeding may be certified.(2) In the circumstances set out in subsection (1), the limitation period applicable to a cause of action referred to in that subsection is suspended for the period beginning on the commencement of the proceeding and ending on the date on which(a) the time for appeal of an order referred to in subsection (1) (c) expires without an appeal being commenced, or(b) any appeal of an order referred to in subsection (1) (c) is finally disposed of.

CHICKENS AND EGGS: WHICH MOTIONS COME FIRST IN A CLASS ACTIONIn Amex Bank of Canada v. Ptack, 2004 QJ 10135 (CA), the court dismissed an appeal of a decision refusing to allow the defendant to seek a stay of the action in advance of the certification hearing. However, the court did say that the law does not prevent a judge from issuing a stay in advance of certification if that is justified in the interest of justice.In Bellows v. Quick Cash Ltd., 2004 NJ 352, the Plaintiff filed a claim under the Class Actions Act against the corporate Defendant and its officers and directors, alleging that the Defendants were charging and collecting interest on loans at rates in excess of the maximum interest rate permitted by the Criminal Code. The Defendants filed an Interlocutory application seeking (a) an order to strike several paragraphs in the affidavit filed by the Plaintiff in support of the certification application on the grounds that it contained conclusions of law on the ultimate issue to be determined at trial and (b) an order striking the claim against the directors and officers on the basis that the personal liability of directors and officers arising out of the actions of the corporation does not exist in law. On a preliminary issue, the Plaintiff submitted that the matters raised by the Defendants should be argued and determined at the certification hearing. The Court found that the legislature expressly reserved the issue of whether the pleadings disclosed a cause of action for the certification hearing. As well, for reasons of practicality and efficiency and to avoid litigation by instalment, these issues should have been addressed at the certification hearing. However as Counsel had expended the time and resources to argue the issues raised in the application, the Court proceeded to rule on them. The Court ordered the affidavit be revised prior to the certification hearing with all legal conclusions to be omitted so that the Defendants are not put through the expenditure of responding to this evidence. Further, the Court found that the Plaintiff is alleging against the directors and officers (a) alter ego,(b) knowledge of illegality, (c) responsibility for illegality, (d) intention to use the corporate veil to circumvent illegality, as separate factual bases for liability which are indeed legal bases on which a court may disregard the separate existence of the corporation. There is a possibility of success against the individual Defendants if the alleged material facts are proved. Therefore, the Statement of Claim against the individual defendants disclosed a reasonable cause of action.BAYER SETTLEMENT APPROVED IN BC AND QUEBECA proposed class settlement was approved by courts in BC and Quebec: 2004 BCSC 1276, 2004 QJ 11125. The BC case had a unique feature, in that part of the class action had to be decertified in order to effect the settlement. The court indicated that it was prepared to do so, as long as there was no prejudice to the decertified portion class, including no provision preventing the excluded class members from commencing their own class action. The writer was co-counsel for the plaintiffs in BC.DISCONTINUANCE ORDER GRANTED IN ONTARIOIn Vennell v. Bernardo's, 2004 OJ 4171, the court agreed to allow a case to be discontinued prior to certification. The court had earlier ordered notice of the intended decertification, and no objectors appeared. The court stated: "In the absence of any evidence, or reason to believe, that members of the previously proposed class have relied to their detriment in any manner on the pending class proceeding, or that their ability to commence proceedings on their own behalf would be prejudiced by the conversion of the action to one under the ordinary procedure, approval is granted for the discontinuance". The court also declined to make any costs award in favour of the defendant for the costs incurred relating to the purported effort to make the case a class action.LEAVES DENIED BY SCCThe decision by the BCCA to certify a financial investment case will stand: See Great Pacific Management Co. Ltd. v. Guy J. Collette, et al. (B.C. C.A., March 1, 2004) (30301) (S.C.C.)The merits decision by the Ontario Court of Appeal in the ongoing Authorson decision will also stand: Authorson, deceased, by his Litigation Administrator, Peter Mountney and by his Litigation Guardian, Lenore Majoros v. Attorney General of Canada (Ont. C.A., March 25, 2004) (30343) (S.C.C.)CAPERS CERTIFICATION UPHELDThe BC Court of Appeals has dismissed an appeal from a decision certifying a class action against Capers flowing from a hepatitis A scare at the grocery store: Fakhri v. Alfalfa's Canada Inc., 2004 BCJ 2200.INDIAN BAND REPRESENTATIVE ACTION REFUSEDIn Papaschase Indian Band v. Canada, 2004 AJ 999, the court refused to approve a proposed representative action because the proposed plaintiffs were not properly members of the band.STATEMENT OF DEFENCE REQUIREMENT TO BE CONSIDERED BY BCCAIn MacLean v. Telus, 2004 BCCA 510, the BCCA granted leave to consider a decision upholding the BC requirement for a defendant to file a defence in advance of certification.QUEBEC ESCAPES FEDERAL COURT ACTIONIn the proposed tainted food class action Sylvain v. Canada, 2004 ACJ 1814, the court allowed the Province of Quebec's summary judgment application on the basis that the Federal Court had no authority to rule in cases against the Province of Quebec.INDUSTRY CLASS ACTION FACES MINOR SETBACKIn Banque MNBA Canada v. Procureur General, 2004 QJ 10134, the Defendant banks appealed a judgment (1) declining their claim for declaratory relief, and (2) joining the class actions against the several banks into one proceeding. The Court of Appeal upheld the judgment declining to grant declaratory relief, agreeing that this should be considered in more fully in the context of the pending class litigation. However, the court struck the order joining the actions on the basis that no such motion was before the court.ATTEMPTED APPEAL OF CERTIFICATION DISMISSEDIn Popovic v. Ville de Montreal, 2004 QJ 11005 (CA) the court denied the defendant's request to appeal the decision certifying the proposed class action.SETTLEMENT DISTRIBUTION APPROVEDIn Doyer v. Dow Corning, 2004 QJ 11124 the court approved the means of distribution of certain settlement funds in this breast implant class action.REFUSAL OF CANCER TREATMENT CLASS ACTION UPHELDIn Cilinger v. Quebec, 2004 QJ 11627 (CA) the court upheld the refusal to certify the proposed class proceeding against the provincial government regarding the funding breast cancer treatment. The case had been dismissed on the basis that there was no cause of action. The action continues however against the hospitals.INDIVIDUAL ACTION STAYED PENDING RESOLUTION OF CLASS ACTIONIn Laliberte v. Canada, 2004 ACF 1844, the Federal Court stayed an individual action because there was an ongoing appeal about the merits of a similar second hand smoke case ongoing in the context of a proposed class proceeding. The court found that a stay would potentially prevent inconsistent decisions, and unnecessary costs.DRINKING WATER CLASS ACTION CERTIFIEDIn Bayard v. Ville de St-Gabriel, 2004 QJ 11134, the court certified an action alleging damage caused by problems with the town's drinking supply. The defendant raised an interesting argument that the class action should not be approved since it essentially meant that class members were suing themselves through the municipality. The court noted that the claim was for damages. The court said that the 4 requirements were met, and that there was no residual discretion to refuse certification if these requirements were met. The court said that it would allow 6 months for opting out so that the municipality could inform citizens of the effect that the case might have on municipal taxation.FOREIGN EXCHANGE CALCULATION CLASS ACTION SETTLEDIn Gilbert v. CIBC, 2004 OJ 4260, the court approved the settlement of a case challenging the calculation of foreign currency on credit cards.FORUM CHALLENGED DISMISSED IN CERTIFIED CLASS ACTIONIn Howarth v. DPM Securities Inc, 2004 QJ 9794 the court dismissed a forum challenge by a Texas based defendant in this investment class action.MERITS APPEALS CONSIDERED IN CERTIFIED CLASS ACTIONIn Robertson v. Thompson the Ontario Court of Appeal concluded that, subject to any defence the Defendant Globe might have, the motion judge did not err in concluding that the Globe infringed Robertson's copyright when it included her work in the various databases. The court agreed that the oral licence Robertson gave the Globe did not convey proprietary rights and did not have to be in writing. As such, Robertson's attempt to eliminate the Globe's licence defence failed. The court agreed with the motion judge that the right to restrain granted to an employee is a personal right that could not be invoked by Robertson in the circumstances of this case. As a result ,both the appeal and cross-appeals failed: 2004 OJ 4029 (C.A.).DEDUCTIBLES LITIGATION UPDATEIn Shaw v. Zurich Canada, 2004 OJ 3814 the court considered the question whether a motion to add a plaintiff in a class proceeding can be initiated after there is a finding that the original plaintiff has no cause of action against the defendant. The court concluded that such a motion cannot be initiated subsequent to a finding that the plaintiff has no cause of action. This circumstance distinguished the case from the court's earlier decision in Giuliano v. State Farm, 66 O.R. (3d) 238, where the motion to add or substitute a plaintiff was brought prior to the hearing of the motion for judgment.CERTIFICATION OF INSURANCE CASE REFUSEDIn Bellaire v. Independent Order of Foresters, 2004 OJ 2242, the claims asserted arose out of an alleged failure by the defendant to honour the terms of Universal Life certificates of insurance that which the plaintiff claims were to have a fixed premium throughout the lifetime of the certificate. The court concluded that there was no evidence of a class. Mr. Justice Nordheimer relied on the earlier dismissal of a vanishing premium class action in Kumar v. Mutual Life to conclude that there were no common issues. On preferable procedure, the court noted that the defendant had implemented a voluntary program that paralled a class action settlement approved by a US court. In a subsequent hearing on costs, the court awarded the defendant $63,000: 2004 OJ 2243.STAY ISSUED OF OVERLAPPING CLASS ACTIONThe same firm had issued three overlapping class actions. In a motion brought in one of these actions, the court agreed to stay it as an abuse of process: Marandola v. (August11, 2004) (500-06-000206-033) (Que.S.C.)NEW FILINGSEverywhere (almost): Tony Merchant of Saskatchewan has filed class actions in several jurisdictions challenging the legality of cell phone providers' system access fees. The writer is representing Bell and Alliant in B.C. and Alberta.Ontario:Another payday loan class action was commenced by our Sutts Strosberg, this time against Premiere Cash Advance.A class action has been commenced regarding Tubular Kryptonite Locks: For more information see: http://www.sgmlaw.com/dir/show.asp?contact_id=48Press reports indicate that a Vioxx class action has been commenced.Quebec: 4 competing Vioxx class actions have been commenced in Quebec.A Kryptonite class action has also been filed in Quebec.A class action has been filed against Ford alleging defects in certain of their trucks.Residents of three Quebec City-area neighbourhoods, known as the Flowers, Birds and Music districts, are seeking a judge's permission to bring a class action against Canadian National Railway Co., demanding the company cut noise from a nearby rail yard.A Montreal lawyer is suing six Canadian mutual fund companies, accusing them in a class-action lawsuit of eroding investor returns by allowing short-term trading in some of their funds. AGF Funds Inc., AIC Funds Ltd., CI Mutual Funds Inc., Investors Group Ltd., CIBC Securities Inc. and Franklin Templeton Investments Corp. are being sued in an action that alleges they violated their fiduciary duty to shareholders because they failed to stop market timing. Norman Painchaud is the Montreal-based lawyer who filed the suit.Noranda has been sued in relation to an S03 release from one of their plants.A Quebec consumers group has filed a class action lawsuit against 14 financial institutions and stores, alleging they improperly charge service fees on cash advances from their credit cards. Option consommateurs said yesterday that institutions offering credit cards are tacking on fees ranging from $1 to $10 on top of service charges when cash advances are made with the cards. The group named the Bank of Montreal, Royal Bank, National Bank, CIBC, Laurentian Bank, TD Bank, Citibank Canada, Canadian Tire and the Weston Group, which includes Maxi, Provigo and Loblaw stores under its banner, among others.A Montreal resident has teamed up with a consumers' rights group to ask for permission to launch a class action against Future Shop for what he claims is the retailer's nonexistent home repair service.Francois Raymond has commenced a class action against Lomex Inc. and majority shareholder Sanimal Inc. regarding the smell emanating from a Lomex rendering plant.A Montreal man has filed a request with the Quebec Superior Court for a class-action suit against Bell Mobility on behalf of all Quebec cell phone customers who were repeatedly overcharged or had their service disconnected as a result of billing errors.BC: A class action has been commenced against Maytag by Poyner Baxter.A Vioxx class action has been commenced by Poyner Baxter.

Abuse class actions have been commenced in relation to alleged mistreatment at the Willingdon Girl's School and the Brannan Lake School for Boys

A pension dispute case has been commenced against the government: Bodner v. AG. It is alleged that the government did not live up to a promise to pay the premiums and extended health benefits for 27,000 retired employees.

A Victoria man has started a class-action lawsuit against the Workers Compensation Board. Paul Glover alleges the board has short-changed victims of crime. The lawsuit, on behalf of victims of crime, claims the board has a unwritten policy of compensating about one-fifth the cash that would come from a civil court. The lawyer for the proposed class is Vahan Ishkanian. Sask: A class action has been commenced in relation to Conrad Black's Hollinger problems by Tony Merchant.Merchant Law Group has also filed a class action in relation to Cox-2 drugs Celebrex and Bextra, also made by Pfizer, and Mobicox, made by Boehringer Ingelheim.Nova Scotia: A class-action lawsuit has been filed against the Nova Scotia government and the Atlantic Lottery Corp. alleging gambling addiction caused by video lottery terminals, Counsel for the plaintiffs is Dick Murtha.Newfoundland: A Vioxx class action has been filed by lawyer Jamie Martin.Manitoba: Two sisters are suing Ottawa and several companies, claiming insulation installed in their childhood home has made them sick. The women grew up on Poplar River First Nation where their home was insulated with Zonolite.